The Furnished Holiday Let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade for certain tax purposes.

Individuals, partnerships, trustees and companies who let furnished holiday accommodation situated within the UK or elsewhere in the EEA can benefit from having a FHL.

In order to qualify as an FHL the following criteria need to be met:

• The property must be let on a commercial basis with a view to the realisation of profits. Second homes or properties that are only let occasionally or to family and friends do not qualify.
• The property must be located in the UK, or in a country within the EEA.
• The property must be available for commercial letting at commercial rates for at least 30 weeks (210 days) per year. Prior to April 2012, the annual minimum was 20 weeks (140 days).
• The property must be let for at least 15 weeks (105 days) per year and home owners should be able to demonstrate the income from these lettings. Prior to April 2012 the annual minimum was 10 weeks (70 days).
• The property must not be used for more than 155 days for longer term occupation (i.e. a continuous period of more than 31 days).
• Where there are a number of Furnished Holiday Lettings properties in a business, it is possible to average the days of lettings for the purposes of qualifying for the 15 weeks threshold.
• There is a special period of grace election which allows homeowners to treat a year as a qualifying year for the purposes of the Furnished Holiday Let rules where they genuinely intended to meet the occupancy threshold but were unable to do so subject to a number of qualifying conditions.

The Furnished Holiday Letting scheme offers valuable tax reliefs provided all the necessary conditions are met, however the increases in the limits and rule changes over the last few years have meant that careful consideration must be given to ensure whether a Furnished Holiday Let is a good investment – especially if the qualifying criteria are in jeopardy.